Rahul Sharma, Portfolio Manager for Schafer Cullen Capital Management, joined Zoe Hunt, Host of RIA Channel, to discuss navigating emerging markets amid geopolitical uncertainty, the growing AI ecosystem, and long-term investment opportunities.
While geopolitical shocks can create uncertainty in the marketplace, Sharma encourages investors to distinguish between different types of geopolitical events. He explains that situations such as war, poor political management, or deteriorating macroeconomic conditions may warrant reducing risk, while other crisis events, including financial crises or terrorist attacks, have historically created long-term buying opportunities. Sharma explains that although these events often produce short-term market selloffs, markets have consistently recovered over time. For long-term investors, even imperfect market timing has generally had little effect on overall returns because these events tend to have a limited impact on corporate earnings, adding that earnings growth is what ultimately drives stock prices over the long term.
Sharma also argues that emerging markets offer an overlooked way to gain exposure to artificial intelligence with less risk. Many of the companies producing semiconductors, servers, cooling systems, and other critical AI infrastructure are based in markets such as Taiwan, South Korea, and China. These businesses benefit directly from AI investment spending while trading at meaningful valuation discounts compared to many U.S. technology companies, which could provide more room to absorb negative surprises. He also points to Chinese companies developing large language models at lower costs.
Beyond AI, Sharma highlights opportunities in energy transition, energy security, supply chain reshoring, and commodities. He explains that building new manufacturing facilities, semiconductor fabs, and data centers creates demand across construction, engineering, trucking, capital equipment, and commodity companies, resulting in long-term spending trends.
From a valuation perspective, Sharma believes emerging markets remain attractive relative to U.S. equities, noting they continue to trade at a discount while offering stronger projected earnings growth and higher dividend yields. He adds that Schafer Cullen’s emerging markets strategy can be used as a core allocation, paired with a growth or deeper value manager, or within multi-asset income portfolios, with objectives of current income, long-term appreciation, and better-than-average downside mitigation.
WEBCAST – Schafer Cullen Q2 CEMFX Portfolio Update Webinar
To learn more, join Sharma for a webinar reviewing the Emerging Markets High Dividend Portfolio, as well as Schafer Cullen’s recent performance and current outlook on strategy.
Please click here for the article resource guide.
Statements and opinions expressed in this article are those of the author as of the publication date and are subject to change without notice. The views expressed may not reflect those of the Fund, the investment adviser, or their affiliates. This material is provided for informational purposes only and should not be considered investment advice or a recommendation to buy or sell any security. Investors should consider their own financial circumstances and consult their advisers before making any investment decision.
An investor should consider the Fund’s investment objectives, risks, charges, and expenses of the Fund carefully before investing. To obtain a prospectus containing this and other information, please visit www.cullenfunds.com. Read the prospectus carefully before investing.
Investing involves risk. Principal loss is possible. Foreign investments involve additional risks, which include currency exchange-rate fluctuations, political and economic instability, differences in financial reporting standards, and less-strict regulation of securities markets. Mid cap securities are subject to greater investment risk as compared to large cap securities. Past performance does not guarantee future results.
The Cullen Emerging Markets High Dividend Fund is distributed by Paralel Distributors LLC. Paralel is unaffiliate with Schafer Cullen Capital Management.
CUL1096